Morning Commentary: DigitalOcean, Coinbase convertible notes active in early trading

By Abigail W. Adams

Portland, Me., April 9 – While the convertibles primary market remained dormant early Tuesday, there was an uptick of activity in the secondary space with some diversification of the names in play.

Equity indexes were either side of unchanged at the open but selling pressure set in as the session progressed as market players reassess rate cut projections ahead of Wednesday’s Consumer Price Index report.

Markets have widely anticipated June as the start of the Fed’s rate cut campaign; however, still strong inflationary reports have called those expectations into question.

The Dow Jones industrial average was down 307 points, or 0.79%, the S&P 500 index was down 0.75%, the Nasdaq Composite index was down 0.57% and the Russell 2000 index was flat shortly before 11 a.m. ET.

There was $89 million in reported convertibles trading volume about one hour into the session with a broader swath of names in play than the high-grade centric trading of the previous session.

DigitalOcean Inc.’s 0% convertible notes due 2026 were among the most actively traded issues early in the session although with little movement in price.

The 0% convertible notes were trading at 84.125 versus a stock price of $37 early in the session, according to a market source.

The yield on the high-premium notes was about 6.625%.

There was $7 million in reported volume.

DigitalOcean’s stock was trading at $37.07, a decrease of 1.09%, shortly before 11 a.m. ET.

Coinbase Global Inc.’s 0.25% convertible notes due 2030 also saw some action with the notes lower outright as stock took a hit early in the session.

The notes were down about 1 point outright and trading at 103.875 versus a stock price of $253, a source said.

There was $6 million in reported volume.

Coinbase’s stock was trading at $242.50, a decrease of 5.59%, shortly before 11 a.m. ET.

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